One of the major options for the financing of renewable projects has become green bonds. Green bonds have become a viable financing option for governments, businesses, and international institutions to finance a variety of environmentally positive initiatives. These bonds are attractive to investors for several reasons. Investments in environmentally beneficial projects reduces the risk of climate impacts on a portfolio, along with steady financial returns, the fact that green bonds do not require the passing of new legislation, and possible tax exemptions. 

The elevator pitch for blended finance seems like common sense. Combine several sources of financing with different specialties to promote higher returns and mitigate risk. Unfortunately, the reality is a bit more complicated. The combining of several sources of capital, leveraging the expertise and finance of development banks, private commercial banks, non-profit organizations, and governments requires high specialization. Luckily, several countries in Southeast Asia are leveraging these separate sources of capital to make projects that have not been possible in the past more realistic for investors.

The road transport sector in Vietnam makes up a significant amount of its GHG emissions, totaling 18% of national emissions. While currently a cause for concern, the switch to electric transport could be beneficial to both the economy and environment. A report on the EV market in Vietnam found that it has the potential to be a leader in the electric 2-wheeled market as well as a growing demand for rapid passenger vehicles. However, up to this point Vietnam has seen significantly more success in adopting electric 2-wheeled options. Part of this is simply due to the amount of motorbikes in Vietnam. As of 2022, more than 60% of the population of roughly 100 million had a motorbike, whereas in 2020 the car ownership rate was below 6%. Encouraging electric 2-wheeled transport may be the quickest way to reduce the road transport emissions. 

While the United States enters 2023 on a tide of clean energy investment that promises a year of rapid growth, Ecuador is struggling to find any private investment to diversify their energy matrix. Ecuador experienced significant investment in major hydroelectric projects over the last twenty years that was primarily the result of large, publicly run infrastructure projects created through Chinese investment. This has produced a rapid shift to renewable energy, as Ecuador is now receiving 92% of its electricity from hydroelectric facilities across the country. While carbon emissions have been drastically reduced, this approach places Ecuador’s renewable future under the control of Chinese banks and construction companies. Outside of Chinese loans, Ecuador is struggling to find private investment in renewables. In contrast, the US government has chosen a more decentralized approach to promote renewable energy. Private investment in renewable energy in the US continues to increase rapidly as it becomes more attractive both economically and politically. This, combined with favorable legislation, is propelling US private investment in renewables and perhaps offers Ecuador a possible roadmap to the private investment it seeks.

Enel Green Power, one of the largest energy companies in the world, has announced their decision to exit both the Argentinian and Peruvian market. Enel’s plan is to de-invest their energy production in these two countries after they were classified by Enel as “non-strategic assets.” Enel’s disinvestment in these countries may reach over 21 billion USD, or 40% of their global investment reduction. With this in mind, Enel has sold their stake in the largest thermal generation plant in Argentina, Enel Argentina Costanera, capable of producing 2,305 MW in which Enel had a 75.7% stake. They have also sold their 41.2% stake in Central Doc Sud, a gas fired energy generation plant with an installed capacity of 870 MW. Both of these plants were sold to Central Puerto for a sum of over 100 million USD. However, Enel is expanding their investment in other South American countries, raising doubts about foreign investment in Argentina and their ability to reach their renewable transition goals.

In November of 2016, the previously defined “strategic association” between China and Ecuador was upgraded to an “integral strategic partnership” representing the highest level relationship China has with any country.¹ Especially during the presidency of Rafael Correa, the public sector has primarily worked with Chinese banks and construction companies to build up the hydroelectric sector, granting massive project contracts to Chinese banks and construction companies. Under the presidency of Rafael Correa, the Chinese policy banks loaned Ecuador $19 billion, much of which has gone to finance seven hydroelectric plants under President Rafael Correa.

As the U.S. continues to see the highest levels of renewable energy investment in its history, the investment required to expand and improve the energy transmission grid will need to keep pace. This is happening through a combination of private investment and support by the Biden administration. Private companies such as National Grid are investing heavily in grid innovation, while the Biden administration announced $13 billion in new funding opportunities for the modernization and expansion of the electric grid. This funding will be split between the Grid Resilience Innovative Partnership (GRIP) and the Transmission Facilitation Program.